City Project: a Rip-Off Waiting to Happen

Redevelopment can be an important policy tool to revitalize blighted neighborhoods. Over the years, it can claim many successes, but it also has produced more than its share of wasteful boondoggles.

As currently proposed, the downtown City Center Redevelopment Project is a taxpayer rip-off waiting to happen.

Let me be clear that I strongly support revitalizing downtown Los Angeles into a world-class centerpiece of our city. Projects such as the Disney Concert Hall, the new cathedral and Staples Center are a huge leap in that effort. More must be done to increase affordable housing and commercial amenities for the area to truly be a vibrant urban center. However, this redevelopment proposal steps beyond the legal limits and must be rethought. What is the rush?

Redevelopment works by diverting property tax revenue from the city and the county to underwrite new projects, such as commercial, retail and housing developments in economically depressed (defined as blighted under state law) neighborhoods. State law prohibits including property if it isn’t blighted or if its designation isn’t necessary for successful redevelopment to take place. Yet that is what the City Council contemplates doing today.

Commercial interests behind this ambitious plan--which includes within its project area two hotels, a 7,000-seat theater, more than 1million square feet of retail space, 300,000 square feet of office space and 800 housing units--have said that if the city wants a hotel next to the Convention Center, the taxpayers must subsidize it. The developers, however, have declared that they intend to build the rest of the entertainment center whether or not the city coughs up the cash for a hotel. In other words, the nonblighted Staples Center parking lots in the redevelopment area are not key to this project and therefore it violates state law to include them.

Incorporating these parking lots in the redevelopment area would cost the county $278million in property taxes over the life of this project. These are funds that would otherwise support the county’s core mission of providing health care and homeless and job training programs. Demanding that the county pony up to subsidize profit-making ventures by cutting services to the most dependent among us is unconscionable.

If city officials believe that a hotel is so important to the Convention Center’s success, they should offer the developers a full rebate on the 13% bed tax that the city collects from them. That type of subsidy might make the hotels economically viable without compromising the finances of the county.

Worse yet, there are broad hints that this project will also be used to facilitate the building of a new football stadium downtown. The signs are clear: Local business leaders are negotiating with the NFL about moving a team to Los Angeles; a new training camp for the San Diego Chargers is being built 17 miles from downtown. Although two City Council members have introduced a motion to bar use of city or Community Redevelopment Agency funds unless repaid to lure a team or build a stadium here, the county still would be stuck with the tab if the stadium was built within the project area. I support bringing an NFL team to L.A. but not at the expense of county taxpayers.

The City Center plan, as proposed, is improper, illegal and should not be approved. But here’s what should happen: Elements of the proposed project that would truly benefit the poor, such as building and rehabilitating affordable housing, deserve public support, and the county should participate financially in that. The City Council should jettison the 27acres of nonblighted land already scheduled for development regardless of whether the plan is approved.

That leaves us with a redevelopment project we can all support in good conscience, one that would be a win-win for everyone.